Billionaire Zuckerberg's Meta may burn $71bn, S&P warns

S&P revised Meta's credit outlook to negative, forecasting a $71B free cash flow deficit in 2027 due to elevated AI spending. Meta disputes the view, citing strong revenue growth and future opportunities. The company is financing spending through leases and equity issuance, raising governance concerns.

S&P revised Meta's outlook to negative, citing expected free cash flow deficits of $22B in 2026 and $71B in 2027. Meta's Q3 revenue rose 26% to $64.6B, but free cash flow was negative $2.12B. The company plans a $97.5B equity raise and Nvidia will invest $3B. Meta's stock fell 1.5% to $615. S&P forecasts capex of $140B in 2026, over $225B in 2027, and $252B in 2028.

Amazon, Alphabet, Microsoft, Meta, and SpaceX plan to spend $828B on AI infrastructure in 2026, causing Nasdaq 100 to lose $1T in value. Negative free cash flow reported by most companies, with Microsoft raising $25B in bonds. Intel's weak guidance also contributed to market decline. Investors question AI's profitability amid massive spending.

Meta settled a case with a teen plaintiff who alleged Instagram and Facebook's design features encouraged compulsive use and mental health harms. The settlement was reached on 30 October 2026. This case is part of broader litigation examining social media platforms' responsibility for addictive design features and their impact on young users.

The UK's Competition and Markets Authority (CMA) launched an investigation into Meta over concerns that its terms for businesses using Facebook and Instagram may abuse a dominant position. The terms could allow Meta to use content from publishers' websites for its AI products without consent. Meta paused the rollout of these terms but the investigation continues. The CMA will assess if Meta holds a dominant position and if the terms are exploitative.

S&P Global Ratings revised Meta Platforms' credit outlook to negative from stable, citing high AI spending and rising leverage. The agency doubts when capex will generate material revenue. Meta's capex is forecasted to reach $140B this year and $225B by 2027, with leverage climbing above 1.0 times in 2027. Meta disclosed $800B in future spending, mostly for data centers and energy infrastructure.